The Obama administration released on Friday new rules that aim to ease relationships between banks and legal marijuana shops. Banks have been reluctant to allow pot businesses to open accounts given the contradictions between federal and state laws.

The new guidelines created by the US Department of Justice and
the Treasury Department’s Financial Crimes Enforcement Network
(FinCEN) signal to banks they can evade the federal government’s
wrath as long as the marijuana businesses they are transacting
with are following state law and have filed the proper paperwork.

“The Department shares the concerns of public officials and
law enforcement about the public safety risks associated with
businesses that handle significant amounts of cash,” Justice
Dept. spokeswoman Allison Price said in a statement. “These
guidelines, together with the Treasury Department’s guidance to
financial institutions, are intended to increase the availability
of financial services for marijuana businesses — that are
licensed and regulated — while at the same time preserving and
enhancing important law enforcement tools.”

Though several states have legalized medical marijuana, it wasn’t
until Colorado and Washington state passed laws in the last year
allowing broader sales of pot that pushed the need for new
banking rules. High-profile burglaries of shops in Colorado - the
first and only state that has permitted retail outlets to legally
sell marijuana to adults for recreational purpose – have occurred
in the last month. The shops are targeted based on their
necessity to carry cash on hand, given the lack of assurance on
the part of banks and credit unions that doing business with
marijuana outlets wouldn’t conjure the ire of federal law
enforcement.

"There's a public safety component to this. Huge amounts of
cash, substantial amounts of cash just kind of lying around with
no place for it to be appropriately deposited, is something that
would worry me just from a law enforcement perspective," US
Attorney General Eric Holder said on Jan. 23 during a speech at
the University of Virginia.

Friday’s announcement is intended to open up banking services –
accepting deposits, offering payroll checks, easing the
acceptance of credit cards - for pot shops licensed with a state
to sell either medicinal or recreational marijuana.

“Now that some states have elected to legalize and regulate
the marijuana trade, FinCEN seeks to move from the shadows the
historically covert financial operations of marijuana
businesses,” FinCEN Director Jennifer Shasky Calvery said in
a statement. FinCen’s mission is mostly concerned with anti-money
laundering laws and keeping banks from serving as fronts for
criminal groups.

Yet, according to Politico, the memos issued Friday are sparse in
solid details, likely because the Obama administration, in
working with states that have legalized pot, has been accused of
ignoring the illegality of marijuana use on the federal level.

Nevertheless, the directive tells prosecutors in states where
marijuana is legal that they should focus on eight areas of law
enforcement pertaining to pot businesses, including drug sales to
minors, using a business as a front to sell other illegal drugs
or working with drug gangs or cartels.

Banks must verify with their state whether a marijuana business
is licensed. Banks also must follow the businesses closely and
report suspicious activity to federal authorities in order to
stay clear of violating anti-money laundering laws, FinCen said.
The federal agency said banks must be aware of whether the stores
are making more money than expected from selling marijuana.

The Justice Dept. and FinCen said the new rules do not grant any
activity immunity from prosecution, again highlighting the
delicate nature of marijuana legalization for
federal agencies.

The guidelines are mostly aimed at smaller banks rather than
large national banks, which are unlikely to associate with pot
outlets anytime soon.

“Through our outreach we were led to believe that there would
be perhaps some banks that would be willing to offer these
services and probably some of the smaller, medium banks rather
than some of the largest ones in this country,” a senior
FinCEN official said.

Despite the new directive, banks and their lobbying groups are
working on a bill in Congress that would ensure further
protection from running afoul of anti-money laundering laws.